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Congress joins the fray as protests mount over strategic sourcing

(Correction: An earlier version of this story misquoted GAO's Ralph White. Federal News Radio regrets the error.)

As bid protests mount against the Federal Strategic Sourcing Initiative, Congress
is starting to pay more attention to the program's potential impact on small
firms.

Rep. Grace Meng (D-N.Y.), ranking member of the Small Business Subcommittee on
Contracting and the Workforce, and Rep. Tim Walberg (R-Mich.), co-authored an amendment included the 2015 Defense Authorization bill to
require the Government Accountability Office issue a report within a year on the
impact of FSSI on small businesses. The House passed the legislation
May 22.

Under the Meng and Walberg amendment, GAO would review the number of small firms
participating as prime contractors prior to award of a contract as part of the
FSSI, the number of small business primes after the FSSI award and the effect of
any changes between those two events on the health of the small business
industrial base and the sustainability of any savings under the strategic sourcing
initiative.

Additionally, the provision would require agencies to justify and publish the need
to consolidate or bundle contracts under FSSI before they issue a solicitation
under the program.

"Strategic sourcing has the potential to save the federal government money, but as
a member of the Small Business Committee it's my job to balance potential savings
with the impact on the economy, especially on small businesses," Meng said in a
statement provided to Federal News Radio. "I have concerns that strategic sourcing
will lock out small businesses from fairly competing for contracts, and
drastically reduce the number of businesses who are already contracting with the
government. It's estimated that GSA Schedule 73 Holders that supply Jan/San
products and supplies could be reduced from an estimated 1,000 schedule holders to
31 blanket purchase agreement participants . If signed into law, the amendment
that passed the House will create more transparency and give the Committee and
schedule holders a better understanding about the total impact of strategic
sourcing."

This issue of the consolidation justification is at the heart of one of several
bid protests GAO is in the middle of considering around four major strategic
sourcing initiatives.

Back in early April, the Small Business Administration found that
the General Services Administration didn't justify its need to consolidate
contracts under the Office Supplies 3 program.

Ralph White, managing associate general counsel for procurement law at GAO, said
the agency will decide on the protests by June 9.

The OS3 protests have forced GSA to try to extend the OS2 contract for another six
months to November. OS2 was set to expire on May 31.

An email to GSA seeking comment on whether the extension happened was not
returned.

Still, 11 companies filed protests over the OS2 extension, saying such an increase
would be out of the scope of the contract.

It's unclear whether the company's protests were timely enough to force a stay on
the extension.

The Meng/Walberg amendment and these protests show the rising tensions over the
Obama administration's plans for strategic sourcing.

But some observers say the amendment doesn't go far enough.

"On the surface, it would appear that this amendment is the answer to our prayers,
but I am open to discuss whether what I see may not be as wonderful as it appears.
If you find that my concerns have merit, somehow the GAO should be made aware of
the weaknesses of this amendment and not accept it as a solution to the OS3
protest," said Sam Bornstein, a professor of accounting and taxation at Kean
University's School of Business in Union, New Jersey, and a partner with Bornstein
and Song, who has been an outspoken critic of the government's strategic sourcing
initiative. "The GAO study will be issued too late for the federal contractors who
will suffer in the next year while the FSSI is implemented in their categories. By
that time, GSA will have implemented FSSIs for OS2, OS3, furniture, IT hardware,
IT software, JanSan & MRO, building maintenance and operations. These FSSIs will
have caused irreversible damage to these federal contracting communities."

Bornstein said the amendment misses a critical element of any study of FSSI, the
number of jobs lost because of these decisions.

Along with the OS2 and OS3 protests, GAO also is considering five bid protests
over the OASIS multiple award contract for complex professional services. Among
the companies protesting are Smartronix, VSE Corp., American Systems Corp.,
Logistics Management Institute and Ajucar, Anvil-Incus and Company.